2021 was about resilience as real estate companies in Kenya strived to recover from the ravages of the COVID 19 pandemic. The real estate sector remains a key player in the country’s economy. According to an industry report earlier this year, the sector’s contribution as of 2016 was 13.8%, up from 12.6% in 2012. Amidst the economic uncertainty, there are emerging opportunities as work, life and holidays evolve beyond the pandemic. Homes have become central tenets in the live-work-play lifestyle that has been thrust to the fore by the pandemic.
1) Growth of office spaces is likely to continue shifting significantly
It has been reported that there was a 68% recession in the demand for office space in Kenya in 2020. This happened as the government sought to contain the spread of COVID 19 in the country by instituting curfews, lockdown measures, and encouraging employers to allow their employees to work from home. The disruptions in the supply chain and economic recession further fortified the need for organizations to re-evaluate their working models. Organizations will continue to find ways of reducing their overheads by seeking affordable options and adapting work from home models.
2) Holiday stays will keep evolving
Traditionally, holidays were for sandy beaches, road trips, and nyama choma at hotel lodges or resorts. As Airbnb becomes a popular option for holidaymakers, more Kenyans are taking advantage of the opportunity it offers. An industry report showed that Africa is the fastest growing market on Airbnb with Kenya recording a 68% increase in bookings. For investors looking for land that can make them passive income, the opportunity lies in acquiring and developing land in areas such as Ngong, Rongai and Kajiado.
3) The need for residential homes will continue growing
The provision of affordable housing is one of the pillars of the Big 4 Agenda. Through public-private partnerships, the government has ongoing projects in Nairobi, Machakos, Kisumu, and Mavoko. Some of the affordable housing projects in Nairobi in areas such as Ngara and Park Road have been completed.
According to a report by the Kenya National Bureau of Statistics, six out of ten Kenyans found themselves in a precarious situation brought about by the inability to raise rent during the pandemic. This has made it clear for thousands of Kenyans that owning a home is not a goal that should be postponed until retirement age. Affordability is key for the thousands of Kenyans looking for an opportunity to own a home. While there was a 1.4% decline in the demand for residential homes in the year 2020, the year 2021 has seen various segments of the Kenyan population actively pursue opportunities to own a home. Satellite towns such as Ngong Town continue to attract young and old investors. The infrastructural developments in these towns characterized by the development of roads, electricity, and other amenities have made them attractive for potential homeowners.
4) The demand for land will continue to grow
Land proved to be a resilient asset even as the pandemic sent the economy into disarray. Reports indicate that there was a 2.3% annual capital appreciation in the sector in 2020. With the ongoing expansion of major highways such as Waiyaki Way and the Nairobi Expressway, it is expected that the demand for land in the country will continue to grow. Kenya boasts of a significant annual urbanization rate of 4% p.a which is higher than the global rate of 1.9%. The population growth rate of the country is 1.1% above the global average making it a potential hub of economic growth. A relatively young working population that is investment savvy will continue to drive the growth in the demand for land. Satellite towns such Kimuka and Ngong remain appealing to potential investors. Kimuka has the fastest appreciating land prices while land prices in Ngong have been on a double-digit growth trend over the years.
5) The demand for affordable residential units will continue to grow
The completion of major highway projects such as Ngong Road has led to the increase in the prices of residential units in areas near the central business district. This presents a golden opportunity for investors to capitalize on peri-urban areas such as Kajiado and Kimuka which are on the fast track towards development. Devolution has made counties become viable investment options for residential units by expanding access to amenities such as power, water and roads. The Kenya Mortgage Refinance Corporation provides saccos, microfinance institutions and banks with long-term funds that allow them to provide accessible loans to potential homeowners. This is likely to enhance homeownership in the country even as the government drums up support for the affordability of homes as part of the Big 4 Agenda. While investors may be cautious because of economic uncertainties, the vulnerabilities exposed by the pandemic and resilience showed by the middle class may drive up the willingness to take up affordable residential units.
6) The future of real estate is digital
As real estate companies revamp their strategies to enhance their digital customer experience, Kenyans are increasingly purchasing land through digital platforms. This has particularly been appealing to Kenyans living in the diaspora who are seeking opportunities to invest in land. The Ministry of Lands has also made the land acquisition process more transparent by providing a digital portal that allows landowners to conduct a land search, transfer property and obtain a title deed. Due process remains a key component of land transactions even with these advances. Real estate companies in the sector need to ensure they deliver value, quality, and affordability.
Are you seeking a trusted real estate company that delivers value, affordability, and quality? Contact us today and let us guide you.
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